Nodes advertise the fees for forwarding over a channel as part of a [`channel_update`](https://github.com/lightningnetwork/lightning-rfc/blob/master/07-routing-gossip.md#the-channel_update-message) message. The update should be sent as soon as a [`channel_announcement`](https://github.com/lightningnetwork/lightning-rfc/blob/master/07-routing-gossip.md#the-channel_announcement-message) is sent. Each party can decide its own fees for the channel.

For private channels, nodes advertise the fees inside the `r` tagged field of the [BOLT#11](https://github.com/lightningnetwork/lightning-rfc/blob/master/11-payment-encoding.md) invoice.

When forwarding a payment, your node must calculate the required fee for each hop and add it to the payment requested in the invoice. When each intermediate hop receives an [`update_add_htlc`](https://github.com/lightningnetwork/lightning-rfc/blob/master/02-peer-protocol.md#adding-an-htlc-update_add_htlc) message, they will unwrap one level of the [onion packet](https://github.com/lightningnetwork/lightning-rfc/blob/master/04-onion-routing.md#packet-structure), which contains an `amt_to_forward`. This is subtracted from the `amount_msat` in the `update_add_htlc` message, and the difference is the fee paid for this hop. 

If the hop determines that the fee is insufficient, they respond to the sender with [`fee_insufficient` error](https://github.com/lightningnetwork/lightning-rfc/blob/master/04-onion-routing.md#failure-messages) as part of an [`update_fail_htlc`](https://github.com/lightningnetwork/lightning-rfc/blob/master/02-peer-protocol.md#removing-an-htlc-update_fulfill_htlc-update_fail_htlc-and-update_fail_malformed_htlc) message. This message also includes the most recent `channel_update` for this channel so that the payer can re-attempt the payment with new fees.

There is always the possibility of a race condition where fees may have changed between the most recently received `channel_update` and the payment attempt. This is minimized by including the `channel_update` as part of the failure as above.